Even in times of pandemic, IT and IT-enabled services have managed to grow by 40% in the year 2019-20. The services are still focusing on achieving more than $2 billion by the end of this year.
STZA, reforms at SBP & SECP are the exceptional results that came into existence due to the industry’s collaboration with the PM office, through IT Task Force and P@SHA.
The recent methodology indulged in growth, incorporated by the PM office has managed to urge global investors. The current Tax incentives are actively participating in competitiveness with our traditional competitors like India, Bangladesh, the Philippines, and Vietnam.
If we look at FBR’s scheme towards Tax treatment it seems unjustified to the growth of the IT Sector as the scheme is emphasizing more on generating revenue by all means.
The current report says Income Tax Exemption on the export of IT services, to be replaced by Tax Credit Scheme. Tax credit focuses mainly on tax withholding statements and sales tax returns amongst others, which is putting a negative impact on the IT exports growth trend.
“Recent news of the withdrawal of Income Tax Exemption on the export of IT services, and replacing with a Tax Credit Scheme where the tax credit is subject to fulfillment of many conditions such as filing of tax withholding statements and sales tax returns amongst others will negatively impact IT exports growth trend.”, the press release continues.
The scheme proposed by FBR does not seem to include the fact that the export of IT services is exempt from sales tax, due to which there is no point in asking to file sales tax returns.
The proposed scheme may also result in sending investors away. “We are afraid that such abrupt changes in tax policies will not only scare away new entrants/investors but will cause colossal damage to the growth trajectory of existing players.” reported by press release.
In addition to that, the IT sector has never asked for additional benefits. The tax exemption on IT exports till 2025 is proving to be the only substantial support the IT sector is offered. Replacing it will only result in putting a negative impact on IT export growth trend.
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